3 ASX shares UBS says will return better than 36%

The analyst team at UBS has been hard at work this week analysing the deluge of profit reports which have come out, and have issued a number of buy recommendations on companies.

I've selected three of those which UBS believes will perform particularly well from a share price perspective, which I'll run through now.

Let's have a look.

Zip Co Ltd (ASX: ZIP)

Zip on Thursday announced record cash EBTDA of $268.9 million, up 57.9% on the previous year.

The buy now, pay later provider said total transaction volume (TTV) grew to $16.7 billion, up 27.2%, while the number of merchants on its platforms increased 13.8%.  

On the outlook, Chief Executive Officer Cynthia Scott said the company was targeting cash earnings of $340 million in FY27, which would be a 26% increase.

UBS said in a note to clients that the outlook for the current year was better than expected, providing comfort around the defensive qualities of the buy now, pay later business model through slowing economic times.

UBS said:

Whilst macro remains key uncertainty into FY27, we have increased confidence around Zip's defensive quality and ability to drive customer growth and transaction frequency. Our US TTV growth forecast of +30% in FY27 is comprised of 9% customer growth and 19% TTV/customer growth, which we view achievable.

UBS has a price target on ZIP shares of $4.70 compared to $2.76 currently.

Megaport Ltd (ASX: MP1)

This cloud computing company this week announced FY26 revenue of $312.2 million, up 37%, while EBITDA was up 24% to $77.1 million.

Megaport Chief Executive Officer Michael Reid said:

Our team delivered an exceptional result in FY26. The Network business produced its strongest commercial performance to date, Latitude.sh expanded rapidly following acquisition, and our combined capabilities secured major long-term customer contracts across Compute, Network, and Storage. We have materially increased the scale of the business, broadened the markets we can serve, and created a much larger opportunity. Now our job is to execute against it.

UBS said the net outcome of the results report was "firmly in the positive", and they are estimating EBITDA of $624 million for Megaport in FY28.

The broker has a price target of $26.40 on Megaport shares, up from $24.20, compared to the current share price of $18.60.

MA Financial Group Ltd (ASX: MAF)

UBS said MA Financial Group delivered an in-line FY26 result, "though we think the share price reaction (+18%) reflects material potential for upside towards new FY29 targets, and a stronger 2H outlook''.

UBS has a price target on MA Financial Group of $10.10 compared to $7.07 currently.

The post 3 ASX shares UBS says will return better than 36% appeared first on The Motley Fool Australia.

Motley Fool contributor Cameron England has positions in Megaport. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Megaport. The Motley Fool Australia has recommended Ma Financial Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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